Written by Peter Walters
Firing employees is the last thing a company wants to do.
They hired you in the first place because they saw you as a valuable asset, and essentially a strategic investment for building their business. Distilled to its essence, you were hired in the first place to be a strong, well-oiled cog in the business.
Unfortunately, unforeseen events often force companies to downsize and “consolidate” the team.
While there are ways to help avoid layoffs, there are many factors that could necessitate downsizing that are even out of the executive team’s control.
Here are three tips for small businesses owners to avoid laying off workers, yet still meet financial goals.
Rethink The Financialization of Your Company
There are essentially two paths to save money:
1) Increase the value of your venture by adding services, using new technologies to offer services your competitors do not, and generally trying to be the best, thus increasing your user base and revenues. See Zappos as a prime example of a company that really put their customer first.
2) Cut all unnecessary costs across the business. Do you need those weekly recurring orders from Amazon for office supplies and snacks? Do you really need to pay interns, or is it possible that some tech savvy University students would work for free? This is the more traditional (and perhaps unfortunate) route businesses have taken in recent years to increase profits. As one might imagine, services, employee satisfaction and various other areas of the business can suffer as a result. See all major airlines as examples (i.e. we now pay for peanuts and pillows!).
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Avoid Corporate Business Structural Complexity
There is often a tendency to make everything complex within a new business. The rationale is that complexity is linkedin with organization, structure and enables efficient scaling.
While this is partially true, the reality is that complexity breeds complexity, and the more layers and systems that you create, the more necessary employees and positions will need to be filled. Adding layers, systems and regional teams and offices is just a recipe for layoffs.
If at all possible, maintain structural simplicity from the outset to avoid layoffs of necessary positions. Keep the team tight, small and wearing lots of hats until your business model and customer base has been proven.
Focus on Long-Term Future Objectives
Too many businesses are focused on the short term -- making a quick buck and becoming profitable and scaling as rapidly as possible.
Recent research is advocating against this “head-down” type of grind to build, ship and monetize new products as quickly as possible. These short-term revenues can be costly and ultimately are not the right approach. These are short-term fixes that often cannot be sustained.
As a result, employees are often the first to be nixed, when in reality the problems are often structural, rather than a matter of costs; that is, the systems that enable growth in these companies is inherently broken and are self-perpetuating.
Remember that employees are your greatest assets and as soon as you remove one, your “machine” will be weakened. Their work will be left to the wayside for a time, their clients will be at least initially forgotten or juggled between new hires and things will be in disarray.
That said, we live in an economic environment where layoffs are a fact of life. If you follow these tips, hopefully (and do cross your fingers), you can avoid the layoffs by generally thinking of your employees as your most valuable assets, right along with your customers.
About the Author
Peter Walters is a freelance writer for sites such as Spokeo.com, Reputation.com and others. He is the Director of Business Development for Two Degrees and lives in San Francisco.